Key Points
- The FTC finalized its settlement with Cox Media Group over the company’s “Active Listening” advertising product.
- The FTC said CMG falsely claimed the product used artificial intelligence and smart-device conversations to identify consumers who were likely to buy certain products or services.
- CMG will pay $880,000 under the consent agreement; two marketing firms involved in the product, MindSift and 1010 Digital Works, will each pay $25,000.
- The combined $930,000 in payments is intended to help affected CMG customers recoup some spending on the services.
The Federal Trade Commission (FTC) this week finalized a settlement with Cox Media Group (CMG) over an advertising product regulators said falsely claimed to use artificial intelligence and smart-device conversations to identify potential customers.
The FTC voted 2-0 to approve the consent agreement with CMG, locking in an $880,000 payment by the radio and TV broadcaster. The agency also finalized settlements with MindSift and 1010 Digital Works, two marketing firms led by Dmitriy Shteynbu that worked with CMG. Each will pay $25,000, bringing the combined payments to $930,000.
The FTC said the money is intended to help CMG customers recover some of what they spent on the allegedly deceptive services.
The case centers on CMG’s “Active Listening” marketing service, which the company began offering to small business customers in 2023 through an arrangement with MindSift. According to the FTC, CMG represented that the product could determine in real time when consumers were in the market for a product or service based on conversations overheard by smart devices.
CMG’s marketing materials promoted “Voice Data AI” and claimed the technology could identify potential buyers from casual conversations. One pitch told prospective customers, “Creepy? Sure. Great for marketing? Definitely.”
The FTC said those claims were false. Regulators alleged the product did not collect or use voice data. Instead, the service relied on consumer email lists purchased from data brokers and resold to advertisers at a significant markup.
The agency also said the product failed to deliver the localized targeting CMG advertised. Although CMG promoted territories as small as 10- or 20-mile radiuses, the FTC said consumers in the data lists came from across the country, with only a fraction located near the advertiser.
The FTC also challenged CMG’s claims that consumers had consented to having their conversations used for advertising. According to the complaint, CMG told skeptical customers that consumers effectively consented when they accepted terms while downloading apps or setting up devices. The agency said CMG did not obtain consent to collect or use voice data for marketing purposes.
The FTC said that even if the service had worked as advertised, collecting and using consumers’ voice data without adequate consent would have violated the FTC Act.
Under the final order, CMG is barred from misrepresenting the features of its advertising and marketing products, whether it collects or uses voice data, whether consumers consented to such use and the geographic targeting capabilities of its services.
CMG did not admit wrongdoing under the consent decree. The company must pay the $880,000 within eight days of the order becoming effective and has provided customer information to the FTC to help administer potential refunds.
The order also places CMG under a long-term compliance regime. The company must maintain specified records, submit a compliance report after one year and provide copies of the order to executives and employees with responsibilities tied to its requirements. The order generally remains in effect for 20 years.
When the settlement was first announced in May, CMG said it was glad to have the matter resolved and no longer offered the products included in the complaint.
“Our local marketing team relied on marketing materials provided to us by a third-party vendor about their product,” the company said at the time. “We withdrew the materials expeditiously and stopped further use of the product.”
